How to Build a Case for Open Source

Open source is the standard of the future. Although closed-loop platforms will continue to exist, and new ones will emerge, their use will be limited to microcosms such as single multinational enterprises, governments, etc.

“Open source is huge,” said Vijay Kanal, managing principal of San Francisco-based Kanal Consulting. “Everyone from IBM down is doing it. It is a lower-cost alternative that is gaining a lot of momentum.”

The primary driver of open source is cost — open-source solutions are either free or exceptionally low cost.

“In addition, companies are realizing that open source still offers what they’re looking for,” Kanal said. This news, however, is only starting to surface. For many IT professionals, open source has been a phenomenon they hoped would be contained, if not exterminated. (Microsoft is predicted to be the last to embrace the open-source movement.)

“Even Sun and IBM would prefer open source to go away, but they’ve come to live with it and are trying to make a business model work,” Kanal said.

Open source changes the revenue streams for software developers, systems integrators and small businesses that make their bread and butter customizing off-the-shelf solutions or supporting start-ups that are not large enough to hire technical staff. IBM has made up for revenue lost on the software side by adding services. Savvy software developers and network administrators are making a case for open source by boosting the services they offer clients.

But as more hardware providers such as Dell offer Linux, for instance, companies (especially enterprises) will be looking for help. That is where solutions providers of all kinds will make their money, Kanal said. Untangle, the San Mateo, Calif.-based security software developer, recently made its open-source products available for free to all customers. Previously, the software was available to only businesses with 10 or fewer employees.

A couple of reasons led to the decision to move to open source, said Raul Mujica, vice president of marketing. Open source performs better for software integration and can be marketed with greater success, especially to small and midsized businesses.

Additionally, open-source software development generally is more transparent and generates more feedback from end-users, helping Untangle improve its products and draw more users to it, Mujica said.

“The network security product market is commoditizing quickly,” he said. “We could either hang back or get in front, and open source was a way to get in front.” The company, founded in 2003, went open source earlier this year.

“We needed to reach a price point that SMB guys could afford, and open source allows us to do that,” Mujica said. Untangle’s case for open source: Become prominent in the market through inexpensive or free software downloads and earn money servicing and supporting customers who adopt the solutions.

This new-age business model includes revenue from premium updates and custom programming for large clients.

“If 90 to 95 percent of the applications don’t ever pay us anything, that’s OK,” Mujica said. “Sure, our ASP revenues are fairly low, and a big percentage of our installed base will be free. But the growth is phenomenal.”

Untangle cannot support extravagant marketing with this business model, but word of mouth has filled in where marketing expenditures have dropped out.

“Developers are going very rapidly to develop on open-source platforms,” he said. “The business is changing to accommodate open-source models within industries and across industries. It is just a matter of time before you can say open source is in the mainstream. Three years, five years — it’s definitely in the single digits.

“When we have open source on cell phones, that’s when it’s achieved mainstream.”

Kelly Shermach is a freelance writer based in Brooklyn, N.Y., who frequently writes about technology and data security. She can be reached at editor (at) certmag (dot) com.